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So you have decided to go out on your own and start your own roofing business. Congratulations!!!
There are a few simple techniques below that will help you save money and honestly quite possibly be the difference between running a successful business or abject failure. So do yourself a favor and spend some time reading this article.
You will be shown a lifetime of knowledge in a few simple paragraphs that anyone can understand. So let me start you on a journey to success.
Type of Business Entity
This should be the first step in any business plan. To be successful you must plan ahead. There are 4 major types of business entities to choose from:
Sole Proprietorship (DBA)
This type of business is the simplest and most basic. You use your own name or a DBA. It is taxed as a pass-through entity.
The pros of this type of entity are that it is cheap and you can use your own social security number or you can get an EIN (Employer Identification Number). The Cons are that you have no protection from creditors if things go wrong.
Partnership
This is another simple type of business arrangement when 2 or more people start a business together.
The tax information on Partnerships can be found HERE. The pros are that it is simple to start and not very costly to organize. The cons are like the Sole Proprietorship, you have no protection from creditors if things go wrong.
Corporation (INC)
This type of business entity requires that you file paperwork with the Secretary of State where your business is located. The tax information can be found HERE. The pros are that it is relatively simple to form, and it gives you the protection of your assets that are not included in the corporation from creditors in the case of business loss.
Cons, it can be expensive to set up, you will need to possibly file State and Federal Corporate tax returns. Each year there are generally fees paid to the State to keep the corporation in good standing.
Limited Liability Company (LLC)
This type of business entity requires that you file paperwork with the Secretary of State where your business is located. The pros are that it is relatively simple to form, and it gives you the protection of your assets that are not included in the LLC from creditors in the case of business loss. You can choose how the entity is treated for income tax purposes.
Cons, it can be expensive to set up, you will need to possibly file State and federal tax returns depending on how you chose the entity to be taxed. Each year there are generally fees paid to the State to keep the LLC in good standing.
Pro-Tip
It is best to start the business off the right way even if money is tight. You should contact a lawyer or an accountant to guide you through. It is money well spent and may save you future heartache.
Ask your advisor about the costs of forming the different types of entities, including the annual costs to keep it in good standing. There are certain quirks in the various State laws that you need to research. For example in Illinois roofers can not form an LLC the must form a PLLC, it is basically the same thing as an LLC, but if you try to get your roofing license your application will be rejected and you will have to amend your filing with the Secretary of State to change to a PLLC. California requires LLC’s to post an expensive $100,000 bond for Workers Compensation, if you have a corporation it is not necessary. These are just a couple of examples of pitfalls for the unaware.
Do I Need A Roofing License?
You need to do a little research. A number of states require licenses to become a roofer. You can find a list HERE. Roofing is regulated at the State level. Every state has different requirements. Further, there might even be County or Local requirements. The license requirements may be very strict depending on the state you are located in.
For example, Illinois has two license classifications, Limited and Unlimited licenses. To get the license you must register with the State and pass an examination based on your request classification. There are also insurance and bond requirements.
In some instances even though you have a State license a local municipality may require you to register before you can pull a permit. This usually entails filling out their application along with providing them proof of insurance.
There are many resources available online that you can use to find the exact requirements.
Pro Tip
Many municipalities and States may require you to purchase a bond. There is no blanket bond that covers everything. Each bond must be purchased individually, luckily they are usually around $100.
Picking A Name
You need to pick a name for your business. I know this may sound simple-minded but you need to pick a name that sounds professional. I have been doing this a long time and the names people come up with might surprise you. I have heard and seen almost anything. Would you hire a company called 3 Drunks with Hammers, LLC., to install your roof?
Try to keep names simple and easy to spell as well. I wasted many minutes trying to get long email addresses over the phone correct.
Get your domain name as your email address. This does not cost very much and makes you look more professional than using a Gmail account or Yahoo.
Insurance For New In Business Roofing Companies
Getting affordable New in Business Roofing General Liability Insurance can be a daunting task. Roofing is one of the risker contracting trades. Employees can get injured from falls, the roofing process can go wrong and property and persons may be injured.
Most standard insurance companies like State Farm and Allstate do not write General liability insurance for roofers. The companies that do write Roofers Generally do not take new business roofers. At ContractorsLiability.Com we specialize in getting New In Business Roofers Insurance. It is actually our specialty.
We have helped thousands of roofing companies across the country get insurance for the first time over the last 20 years. So let us start with the basics of insurance for your business.
Roofers General Liability Insurance
This is the most basic insurance. In order to be licensed or pull a permit, you will at the very least be required to have an Affordable New In Business Roofer General Liability Insurance policy. This will protect your business from claims for damage caused to third parties’ property or persons. If you do not have this coverage you will be responsible to pay for these items from your own pocket. It is also important to remember that the coverage also includes payment of legal fees in the event of a covered claim or settlement. In some cases, this can be greater than the amount of the loss.
Workers Compensation Insurance For New Roofers
Every State will require you to have Worker’s Compensation Insurance if you have employees. In most instances, you will have to go into the insurance “pool”. This pool is made up of insurance companies that write business in the State. Since worker’s compensation insurance is mandatory the State needs a mechanism to force Insurance Carriers to write business they otherwise would not write.
Since you have no experience with the insurance company to base their rate off expect to pay a lot. Roofing is a high-risk class code so you will pay large premiums even if you have experience. Workers’ compensation insurance is based on your payroll and the class code that payroll is assigned to. Guys up on the roof have a different code than the person that answers your phone. A new in business roofer Workers Compensation Insurance policy premium will be a percentage of your payroll. For employees doing roofing, you can expect to pay as much as 50% or more of your payroll amount as an insurance premium.
Workers Compensation Insurance is required by law and failure to purchase it to cover employees can lead to large fines along with the responsibility to cover any losses by an employee injured on the job. Your General Liability Policy does not cover injury to employees.
Commercial Auto Insurance
A commercial auto Insurance policy for New In Business Roofers provides coverage for vehicles used in your business. If you only have personal auto insurance and are in an accident there is a good chance your insurance company may deny any claim.
They will not provide coverage if you were using the vehicle for income-generating purposes. It is kind of hard to explain to the insurance company how a van covered in your roofing business’s advertising was being used for personal business.
While commercial auto insurance may cost more than personal coverage, you have peace of mind knowing that you will be covered if there is a claim if you are using your vehicles for business purposes. Further, the money paid for commercial auto premiums can be expensed on your business tax return.
The long and short of it is that if you use your vehicles to produce the income you need commercial auto coverage to be properly protected.
Affordable New In Business Roofer Commercial Auto Insurance Policies has various insurance packages that you can purchase.
You can add what is called hired and non-owned coverage. It covers commercial auto liability damages.
It includes paying settlements or judgments. It will also pay attorney fees and other court costs that arise as a result of an auto accident for which you or an employee is responsible.
Inland Marine Insurance
This type of insurance covers the tools and equipment used in your roofing business. It protects things like tools, compressors, trailers, and other types of equipment from loss or damage. Remember without this coverage you will have to come up with the money to replace things that are lost or destroyed.
Surety Bonds
To be a Licensed roofer some States like IL, CA, and WA to name a few require you to have a bond to get a State license. Even in these States, local municipalities may require you to purchase a separate bond to pull a permit or register as a contractor. These bonds are relatively inexpensive if your credit is good in most cases under $250 a year.
There are some places that do not require a bond but In your everyday life, you see contractors advertise that they are bonded and insured. You might say I want to advertise that as well. That is a wise choice as it separates you from your competitors by showing that you are financially responsible. A bond can be purchased in these situations for around $150 a year. This will allow you to show prospective clients that you are bonded and insured.
New In Business Roofers Insurance with ContractorsLiability.Com
New in Business Roofing Contractors truly have unique insurance needs. From General Liability Insurance, Workers Compensation, Commercial Auto, Inland Marine Insurance, and Surety Bonds.
Let us take the hassle out of searching for the best New In Business Roofer insurance quote. Tell ContractorsLiability.Com about your business, and we’ll help you find a policy tailored to match your needs at the best price. We are one of the internet’s premier agencies for helping New In business roofers find insurance.